Montgomery County looks to reform bag tax

New legislation proposes excluding restaurants from charge

Dan Gross/The Gazette
Janet Yu takes a phone order while she rings up a carry-out order packed in plastic and paper bags at Hollywood East Cafe in Wheaton.

As Montgomery County politicians rethink portions of its tax on carryout bags, whether the fee should stay, or at least in part, go depends on whom you ask.

In January 2012, Montgomery County began charging a 5-cent tax on most carryout bags, exempting only a select few totes, including paper bags at restaurants.

But just 18 months after the excise tax was implemented, a group of lawmakers is looking to exempt even more from the charge. Their proposed bill would effectively limit the tax to only retailers who gross more than 2 percent of their sales from food.

“It’s troubling to me that the council is reconsidering a program that is having the desired effect,” Julie Lawson, director of the Trash Free Maryland Alliance said during a June 18 hearing on the issue.

Montgomery began charging the tax January 2012 with a goal to change residents’ attitudes from blase to environmentally conscious and to reduce the number of bags in waterways.

Councilman Roger Berliner stood behind the original tax, even though he is now lined up behind the proposal to scale it back. Berliner (D-Dist. 1) of Bethesda said he feared the bill overreached and has bred resentment of the government.

Jane Redicker president of The Greater Silver Spring Chamber of Commerce testified that her members have encountered incredulous shoppers who refuse to give even one cent more to the county.

Bethesda retailers have told the Greater Bethesda-Chevy Chase Chamber of Commerce of angry customers, while others have commented that the tax is yet another barrier to doing business in the county, president Ginanne Italiano said.

Yet some retailers say shoppers are adapting.

Customers at Strosniders Hardware Store on Arlington Road in Bethesda have made an easy transition to bringing their own bags, store manager Jim Beckett said.

“They’re pretty much going with the flow,” he said.

The transition to taxing bags was also easy for Strosniders’ employees. Adding the code to the registers was easy, he said.

While some council members fear the tax has created safety concerns as shoppers carry bags around stores, Beckett and his employees have also taken extra precaution by creating an area in the store for people to place their bags while shopping. Beckett said they haven’t had any major increase in theft, but can see how it is easier to steal when customers bring their own bag.

Strosniders also placed a sign in the front of the store that says employees will watch customers’ bags as they shop.

The tax has also reduced overhead for retailers. Tracy Bloom Schwartz, owner of Creative Parties Inc. on St. Elmo Avenue in Bethesda, now gives out a fraction of the bags she did before the tax.

Before the bag tax she would give out 300 to 400 bags a month, but she now only gives out 20 to 30 a month. Bag usage at her event planning, design, stationery and supply store dropped because customers started saying “no” to a bag at check-out.

The tax is severe, but effective, she said.

“Less people ask for bags than ever before,” she said.

Retailers keep one cent of the 5-cent tax and are only required to return collected tax dollars to the county when they have gathered $100 of bag tax revenue, about 2,500 bags worth. Schwartz said she hasn’t met the 2,500-bag threshold, so she hasn’t had to send in any of her revenue to the county.

Schwartz also admitted that she and her employees occasionally forget to add the tax to the purchase if the customer does ask for a bag.

“I know the county is making profits somewhere,” she said. “They’re just not making it off of small retailers like me.”

Montgomery County collected about $2.2 million from the tax in its first 12 months, double what was expected, and if the tax remains as is, the county expects to collect $2.5 million from taxes on about 60 million bags in fiscal 2013, which ends June 30. The money collected pays for stormwater management projects through the Water Quality Protection Fund.

But Bob Hoyt, director of the county Department of Environmental Protection testified that the proposal to scale back the tax would exempt as many as 85 percent of stores from paying.

County estimates show that would cost it about $700,000 in revenue.

Restaurants want tax ‘to go’

Restaurants would also be exempt under the proposal and area eateries are open to loosening restrictions. Currently, restaurants must charge the tax for plastic carryout bags, but not paper.

Restaurant Association of Maryland spokesman Melvin Thompson said both business and health problems are presented when restaurants are restricted in the way they wish to serve their food.

“We don’t really want customers bringing reusable bags into restaurants that are not properly sanitized,” he said. “Even though a lot of our members ended up switching over to paper, that’s not the best option. When you’re looking at foods that have sauce or wetness, you want to avoid leaks and paper gets soggy. Plastic provides more of a leak-proof barrier.”

Manager Corey Yu says the adjustment to charging for the plastic bags went over smoothly.

However, he said Hollywood East only charges the customer for one plastic bag per order, even when customers have orders that require more than one plastic bag. If an order takes more than one plastic bag, the cafe covers the rest of the tax itself for convenience purposes.

At Tom and Ray’s Restaurant in Damascus, General Manager Mason Dwyer says the restaurant switched over to paper bags to avoid charging customers for plastic.

“A lot of our customers are retired and on a budget and they’re sitting there counting pennies,” Dwyer said. “And to say, ‘I need 5 more cents for a plastic bag’ is crazy.”

Around 15 to 20 percent of Tom and Ray’s business is carryout, Dwyer says, though much of it is in bulk. Patrons will often order hundreds of pieces of fried chicken or gallons of potato salad and coleslaw for neighborhood cookouts. Any way, he said, to help the restaurant work more cost-effectively to fill those orders, is a plus.

“I could get behind [the exemption],” he said. “Anything that makes it more cost effective for us. I hate to inconvenience our customers for the sake of the county.”

Still, many in Montgomery feel the effort to rethink the tax goes too far too soon.

“Getting rid of this bag tax is nonsense,” 12-year-old Coburn Maane of Bethesda testified at the hearing. “I want my environment protected, as I will be the generation that will inherit the trash that is left behind. It is your duty as our elders to protect our environment.”

Bag tax holds water

Behavior change takes time but environmental groups tasked with cleaning area waterways are already seeing results.

Laura Chamberlain, program manager of the Alice Ferguson Foundation said volunteers have recorded a decrease in excess of 50 percent in the number of bags collected from Montgomery County sites along the Potomac River since the bag tax passed.

The Rock Creek Conservancy pulled 3,722 bags from Rock Creek in 2013, a drop of 29 percent from pre-tax 2011 when it pulled 5,274 bags from the creek, Katherine Schinasi testified.

“We believe that all bags are created equal,” she said. “The creek doesn’t know where the bags come from; the Bay doesn’t care if it’s from a department store, a grocery store or a deli. A bag in the creek is an environmental problem no matter where it comes from.”